You are here

3rd Quarter 2014 Airline Financial Data

U.S. scheduled passenger airlines reported a net profit of $3.1 billion in the third quarter of 2014, down from $3.6 billion in the second quarter and virtually unchanged from $3.1 billion in the third quarter of 2013, the U.S. Department of Transportation’s Bureau of Transportation Statistics (BTS) reported today (Table 1).

The 27 U.S. scheduled service airlines reported an after-tax net profit as a group for the sixth consecutive quarter.

In addition to the after-tax net profit based on net income reports, the scheduled service passenger airlines reported a $5.5 billion pre-tax operating profit in the third quarter of 2014, virtually unchanged from $5.5 billion in the second quarter and up from $4.7 billion in the third quarter of 2013. The airlines reported a pre-tax operating profit - as a group - for the 15th consecutive quarter (Tables 1, 3).

Net income or loss, and operating profit or loss, are two different measures of airline financial performance. Net income or loss may include non-operating income and expenses, nonrecurring items or income taxes. Operating profit or loss is calculated from operating revenues and expenses before taxes and other nonrecurring items.

Total operating revenue for all U.S. passenger airlines in the July-September third-quarter of 2014 was $45.3 billion. Airlines collected $34.3 billion from fares, 75.8 percent of total third-quarter operating revenue (Table 1).

Total operating expenses for all passenger airlines in the third-quarter of 2014 were $39.8 billion, of which fuel costs accounted for $11.4 billion, or 28.7 percent, and labor costs accounted for $10.5 billion, or 26.3 percent (Table 1).

In the third quarter, passenger airlines collected a total of $960 million in baggage fees, 2.1 percent of total operating revenue, and $759 million from reservation change fees, 1.7 percent of total operating revenue. Fees are included for calculations of net income, operating revenue and operating profit or loss (Table 1).

Baggage fees and reservation change fees are the only ancillary fees paid by passengers that are reported to BTS as separate items. Other fees, such as revenue from seating assignments and on-board sales of food, beverages, pillows, blankets, and entertainment are combined in different categories and cannot be identified separately.

As a group, the top 10 U.S. scheduled passenger airlines, based on operating revenue, reported an after-tax net profit of $3.0 billion in the third quarter of 2014, down from a profit of $3.5 billion in the second quarter and virtually unchanged from a profit of $3.0 billion in the third quarter of 2013 (Table 2). These airlines carried 79.0 percent of U.S. airlines’ scheduled service passengers in the third quarter and accounted for 95.3 percent of the scheduled passenger airline after-tax net profit.

In addition to the after-tax net income reports, the 10 top airlines reported a $5.2 billion pre-tax operating profit in the third quarter of 2014, virtually unchanged from a profit of $5.2 billion in the second quarter and up from a $4.5 billion pre-tax operating profit in the third quarter of 2013 (Table 3).

Margins for All Scheduled Passenger Airlines

All U.S. scheduled passenger airlines reported a combined net income margin of 6.9 percent in the third quarter of 2014, down from a net margin of 7.2 percent in the third quarter of 2013. Net margin is the net income or loss as a percentage of operating revenue. These airlines reported an operating profit margin of 12.1 percent in the third quarter of 2014, up from 10.9 percent in the third quarter of 2013. Operating margin is the operating profit or loss as a percentage of operating revenue (Table 4).

For the year-to-date January through September period, all U.S. scheduled passenger airlines reported a combined net income margin of 5.6 percent in 2014, up from a net margin of 4.1 percent in 2013. These airlines reported an operating profit margin of 9.9 percent in the first nine months of 2014, up from the same period in 7.4 percent in 2013 (Table 5).

Data are compiled from quarterly financial and monthly traffic reports filed with BTS by commercial air carriers. Financial and traffic data include data received by BTS as of Dec. 9. Revised carrier data and late data filings will be made available monthly on TranStats on the Monday following the second Tuesday of the month. All data are subject to revision. BTS will release fourth-quarter 2014 data on May 4.

* Passenger airline operating revenue includes two other categories. 1) Transport-related is revenue from services which grow from and are incidental to the air transportation services performed by the air carrier. Examples are in-flight onboard sales (food, liquor, pillows, etc), code share revenues, revenues from associated businesses (aircraft maintenance, fuel sales, restaurants, vending machines, etc). 2) Miscellaneous operating revenue includes pet transportation, sale of frequent flyer award miles to airline business partners and standby passenger fees. See the P1.2 database http://www.transtats.bts.gov/Fields.asp?Table_ID=295.

* Transport-Related is revenue/expenses from services which grow from and are incidental to the air transportation services performed by the air carrier. Examples are in-flight onboard sales (food, liquor, pillows, etc), code share revenues, revenues and expenses from associated businesses (aircraft maintenance, fuel sales, restaurants, vending machines, etc).

** Other revenue includes miscellaneous operating revenue (including pet transportation, sale of frequent flyer award miles to airline business partners and standby passenger fees) and public service revenues subsidy.

*** Other expense includes purchase of materials such as passenger food and other materials; and purchase of services such as advertising, communication, insurance, outside flight equipment maintenance, traffic commissions and other services.

**** Operating margin is the operating profit or loss as a percentage of operating revenue

# Nonoperating Income and Expense includes interest on long-term debt and capital leases, other interest expense, foreign exchange gains and losses, capital gains and losses and other income and expenses.

## Net margin is the net income or loss as a percentage of operating revenue.

* Transport-Related is revenue/expenses from services which grow from and are incidental to the air transportation services performed by the air carrier. Examples are in-flight onboard sales (food, liquor, pillows, etc), code share revenues, revenues and expenses from associated businesses (aircraft maintenance, fuel sales, restaurants, vending machines, etc).

** Other revenue includes miscellaneous operating revenue (including pet transportation, sale of frequent flyer award miles to airline business partners and standby passenger fees) and public service revenues subsidy.

*** Other expense includes purchase of materials such as passenger food and other materials; and purchase of services such as advertising, communication, insurance, outside flight equipment maintenance, traffic commissions and other services.

**** Operating margin is the operating profit or loss as a percentage of operating revenue

# Nonoperating Income and Expense includes interest on long-term debt and capital leases, other interest expense, foreign exchange gains and losses, capital gains and losses and other income and expenses.

## Net margin is the net income or loss as a percentage of operating revenue.